Expanding production capacity marginally, setting up a design centre, launching new models, increasing localisation levels, and having a regional celebrity as brand ambassador are among German automobile group Volkswagen's "India 2.0" strategy to become the number three player in the market, said a senior company official on Friday.

Steffen Knapp, Director, Volkswagen Passenger Cars, also told media persons that the Volkswagen group will invest 1 billion euros as part of the India 2.0 strategy, a strategic alliance between Volkswagen and Skoda Auto under which the latter will development volume segment products for the Indian market.

As per the new game plan, Skoda will take lead for bringing Volkswagen's MQB Ao IN platform in India in addition to develop small volume driven cars.

Knapp said the production capacity will be increased by 20,000 units per annum to 200,000 units per annum at the company's Pune plant.

He said that the additional investment of about Rs 8,000 crore will go towards setting up of a design centre in Pune, development of new models and other activities.

"We want to become number three in India as a group (Volkswagen and Skoda together). Currently the group has a market share of 1.8 per cent in the Indian car market and is targeting a share of five per cent by 2025," Knapp said.

He said the production will be the responsibility of Skoda while marketing, selling, after sales services and others will be the responsibility of Volkswagen.

Volkswagen will launch a sports utility vehicle (SUV) and Knapp said the company will not be missing the SUV sales boom.

He also said that Volkswagen will increase the level of component localisation to over 90 per cent from the current levels of about 82 per cent in a year's time.

According to him, about 90 per cent of the Volkswagen car buyers in India are first time car owners and the company is focusing on loyalty programmes so that the customer is retained.

Queried about the distribution network expansion, Knapp said with increased urbanisation, the real estate cost for dealers will go up and hence the company is looking at increasing the touch points like display of models in malls, online sales and other places.